Microsoft (MSFT) Stock: Office 365 Subscription Prices Soar Up to 33% for Business Customers

Microsoft just handed business customers a new invoice—and it's a lot bigger.

The Price Hike

Office 365, the cloud-based productivity suite that's become non-negotiable for modern operations, is getting more expensive. Microsoft confirmed subscription costs are rising, with some business plans facing an increase of up to 33%.

Reading the Market's Tea Leaves

This isn't just a routine adjustment. A jump of this magnitude signals deep confidence in product stickiness. When your software is woven into the daily workflow of millions, you can test the limits of pricing elasticity. It's a classic enterprise software play: establish the ecosystem, then gradually turn the monetization dial.

The Bottom Line for Businesses

For finance departments, the memo is simple. Budgets for software-as-a-service are inflating, with one of the largest line items getting significantly heavier. It's another push for companies to scrutinize license counts and actual usage—or start evaluating alternatives, though few exist with the same entrenched network effects.

A cynical observer might note this is how you keep Wall Street happy when hardware cycles slow: you monetize the software lock-in you spent a decade building. For Microsoft shareholders, it's a straightforward revenue boost. For everyone else, it's a reminder that in the cloud, your monthly bill has only one permanent direction: up.

TLDR

• Microsoft is raising prices for commercial Office subscriptions on July 1, 2026, for business and government customers
• Front-line worker subscriptions will see the steepest increase at 33%, jumping from $2.25 to $3 per month for F1 plans
• Business Basic will rise 16.7% to $7 per user monthly, while Business Standard climbs 12% to $14
• Enterprise plans see smaller increases with E3 up 8.3% to $39 and E5 up 5.3% to $60 per month
• Microsoft last raised commercial Office prices in 2022, citing over 1,100 new features added across the platform

Microsoft announced Thursday it will raise prices for its Office productivity software subscriptions starting July 1, 2026. The increases will hit commercial and government clients across multiple subscription tiers.

The price changes mark the second commercial Office price hike in four years. Microsoft last bumped up business subscription costs in 2022.

Microsoft Corporation, MSFT

Front-line workers will feel the biggest impact. The Microsoft 365 F1 subscription will jump 33% from $2.25 to $3 per user per month. The F3 plan will rise 25% from $8 to $10.

Small and medium-sized businesses face double-digit increases. Microsoft 365 Business Basic will cost $7 per person monthly, up 16.7% from $6. Business Standard climbs 12% to $14 from $12.50.

Business Premium subscriptions will stay at $22 per month. The entry-level Office 365 E1 for enterprises remains at $10.

Enterprise Plan Adjustments

Enterprise customers will see more modest increases. Office 365 E3 jumps 13% to $26 from $23. Microsoft 365 E3, which includes Windows updates, rises 8.3% to $39 from $36.

The top-tier Microsoft 365 E5 increases 5.3% to $60 from $57 per user monthly. Government clients will face similar percentage increases, rolled out according to local regulations.

Nicole Herskowitz, corporate vice president for Microsoft 365 and Copilot, justified the increases in a blog post. She pointed to continuous platform investment and innovation.

The company released more than 1,100 features across Microsoft 365, Security, Copilot, and SharePoint in the past year. Herskowitz said these new features have added value to the suites.

Growing Competition from Google

Microsoft’s Office applications face mounting pressure from Google’s competing products. Word, Excel, PowerPoint, and Outlook remain dominant but competition has intensified in recent years.

The price increases come as Microsoft pushes deeper into AI-powered productivity tools. The company offers Copilot as a $30 monthly add-on. Some companies have rolled out Copilot widely while others have paused deployments.

Microsoft changed Office 365’s name to Microsoft 365 in 2020. The company launched the original Office 365 subscriptions in 2011. Microsoft raised consumer Office bundle prices in January 2025.

The company has reduced direct volume deals for certain customer types. Many organizations receive discounts off list prices.

Microsoft’s Productivity and Business Processes segment generated almost 43% of the company’s $77.7 billion in fiscal first-quarter revenue. Microsoft 365 commercial cloud services revenue jumped 17% in October. Seats increased 6%, mainly from products targeting small businesses, medium-sized businesses, and front-line workers.